Welcome to Baku, a city built on oil hosting the world’s climate conference

Fossil fuels are key to this eastern Caucasian country, which shares borders with Russia, Georgia, Armenia and Iran. Azerbaijan’s economy is one of the most dependent on oil and gas, which make up nearly 60% of its income, according to the United Nations. Azerbaijan’s president, Ilham Aliyev, once referred to the country’s reserves as a “gift from God" with the capital Baku itself sitting on an oil field.

All of which makes hosting the biggest climate conference in the world seriously strange. Welcome to COP29.

Global climate leaders will head to Baku for the U.N. Conference of the Parties, known as COP—a two-week summit starting Monday, during which global leaders hash out methods to solve climate change. The event this year has been billed as the finance COP, with the focus on how to find the money for the transition away from fossil fuels and limit global warming.

The COP president, Mukhtar Babayev, is a veteran of the country’s state oil company SOCAR. But the summit’s organizers say Azerbaijan’s link to fossil fuels should not be a cause for concern.

“Our approach and the starting point is that we are all together on this effort, we’re committed to contribute to global climate action and this was the rationale behind our pitch to host COP29," said Samir Bejanov, deputy lead negotiator for COP29.

“We are [an] oil-and-gas producer, that’s true," said Bejanov. “We’re not shying away from our history, but at the same time, if you look at what we are doing in terms of renewables, Azerbaijan has plans to invest billions in renewable projects."

Critics note that the country is looking to increase its exports of natural gas, including more shipments to Europe. Bejanov said Russia’s invasion of Ukraine and rising European demand justified added investment in the sector.

It isn’t the first time a fossil-fuel-producing nation has hosted COP. Last year’s event took place in the United Arab Emirates, and next year’s is scheduled to be held in Brazil, the newest member of the oil-producing cartel, OPEC.

“It is clear that Azerbaijan’s plans to keep increasing fossil-fuel production are not compatible with the commitment it has made to lead by example by submitting an NDC [Nationally Determined Contribution] aligned with the 1.5 degrees Celsius temperature limit, alongside its fellow COP Troika members U.A.E. and Brazil," said Shady Khalil, global policy senior strategist at Oil Change International clean-energy research and advocacy group.

Khalil added that Azerbaijan, Brazil and the U.A.E. are planning to increase oil-and-gas production by 32% by 2035. “These aren’t the actions of credible climate leaders," Khalil added.

The conference comes after the U.N. Environment Programme warned that the Paris target of limiting global warming by 1.5 degrees Celsius this century would be “dead within a few years" if only current policies to limit global warming remain in place. It added that temperatures would likely move 3.1 degrees higher at current spending levels by 2100.

The effects of climate change are already starting to become more pronounced globally. Flooding in Spain a week before the conference killed hundreds, while wildfires, droughts and storms are becoming more frequent.

One of the key discussions being addressed at the COP also will be NDCs—the outline of countries’ individual plans to address climate change and stay aligned with the 1.5 degrees target. The deadline for submission for those is in February, though the expectation is that some countries including Azerbaijan will submit their proposals during the summit.

Attendance this year is likely to be much lower than last year, with a number of companies choosing to send smaller delegations or completely skip the conference in part because of its location. More than 80,000 attended in Dubai, with less than half that figure expected in Baku, the U.N. said.

The U.S. delegation is expected to be led by John Podesta, senior adviser to President Biden for international climate policy. However, President-elect Donald Trump has said that he would pull the U.S. out of the Paris agreement, something he did during his first presidency, clouding much of U.S. climate policy going into the conference.

Most major banks including JPMorgan, Morgan Stanley and Goldman Sachs are choosing not to send their senior executives, despite the summit being dedicated to energy-transition finance. However, the oil-and-gas industry is expected to be well represented. Exxon Mobil’s chief executive is expected to attend while British oil giant BP, which has been closely tied with Azerbaijan’s fortunes since the fall of the Soviet Union and has a major presence in the country, is also expected to show its backing for the host nation.

Meanwhile, many are expecting senior Russian officials and business leaders to attend, given Azerbaijan’s close links with Russia, including those who have been sanctioned by the U.S. and the European Union. Russian President Vladimir Putin visited Baku in the summer.

Human-rights groups say that Azerbaijan aims to boost its international standing and give legitimacy to the country’s government by hosting the summit. It hosted the Eurovision Song Contest in 2012 and now has a regular spot on the Formula One calendar. The president has been in power in the notional democracy since 2003, preceded by his father whose name was given to Baku’s main airport.

In the past year, more than a dozen journalists have been arrested in the country, according to human-rights charities. The European Parliament has denounced the country’s treatment of activists and opposition leaders.

In 2023, Azerbaijan launched an invasion of the Nagorno-Karabakh region, which borders Armenia and is disputed between the two countries. It expelled some 100,000 ethnic Armenians from the region, and took dozens of prisoners during the process. BP has plans to build a solar project in the disputed region.

“Azerbaijan is using COP to green wash its reputation internationally to continue to produce oil and gas for decades to come and act as a disrupter for international politics," said Patrick Galey, senior investigator at Global Witness.

Despite the very strong ties to fossil fuels and the human-rights concerns, the Azeris are eager to tout their country’s green credentials. It is aiming to have 30% of its power come from renewable sources by 2030, building out wind farms and solar parks.

“We have plans to not only invest in renewables and clean technology within the country, we also have plans to export that in the near future and we have plans to export five gigawatts of clean electricity to the European market. So it’s not just Azerbaijan," said Bejanov, the COP29 deputy lead negotiator.

“All countries have different starting points on the investment required to decarbonize the existing system, to build a renewable system of the future. And also ensure that the transition is just and it will differ according to the national circumstances," he added.

Write to Yusuf Khan at yusuf.khan@wsj.com